United States Court of Appeals for the Federal Circuit
October 13, 1999
IMMIGRATION AND NATURALIZATION SERVICE, RESPONDENT.
Before Plager, Schall, and Gajarsa, Circuit Judges.
The opinion of the court was delivered by: Per Curiam.
Dennis McKenna appeals the final decision of an arbitrator approving his removal from employment by the Immigration and Naturalization Service ("INS" or "agency"). The arbitrator determined that INS had established misconduct on Mr. McKenna's part, that Mr. McKenna had failed to prove any affirmative defenses, and that removal was a reasonable penalty for the misconduct. We affirm-in-part, reverse-in-part, vacate-in-part, and remand.
Mr. McKenna began work with INS on July 18, 1991 as a Detention Enforcement Officer. On October 13, 1995, he was removed from his position based upon several charges, including falsifying documents and failing to pay just debts. The falsification charges stemmed from responses Mr. McKenna made on several employment forms: (1) the Standard Form ("SF") 171 he completed in 1989, where he failed to reveal that he was delinquent in paying federal income taxes; (2) the SF 86 he completed in 1991, where he failed to reveal a 1979 felony charge; and (3) the SF 86 he completed in 1992, where he again failed to reveal the 1979 felony charge. The debt charges stemmed from Mr. McKenna's failure to pay federal income taxes and child support. Mr. McKenna sought arbitration of his removal, and arbitration hearings were held in November of 1997.
Before the arbitrator, Mr. McKenna denied that he intentionally falsified any documents. He asserted that when he completed the SF 171 in 1989, he was not aware that he owed taxes. With respect to the felony charge, Mr. McKenna's principal argument was that he was not aware that he was obligated to reveal that charge because it had been dismissed and sealed and was a "nullity" under New York law. Mr. McKenna also pointed out that he disclosed the charge to INS when, in 1991, he provided a Certificate of Disposition from the court showing that the charge had been dismissed and sealed. As far as the unpaid debts were concerned, Mr. McKenna explained that some obligations were disputed and that he was making a good faith effort to satisfy others.
In addition to denying the misconduct charges, Mr. McKenna raised an affirmative defense under the Whistleblower Protection Act, 5 U.S.C. § 2302(b)(8) (1994). Specifically, he claimed that his disclosure of a drug problem at the INS facility where he worked antagonized personnel involved in his removal. Mr. McKenna argued that his whistleblowing activities were a factor in his removal, and asserted that a similarly situated employee (an INS Inspector) who was not a whistleblower had concealed a prior arrest but was not subject to disciplinary action.
The arbitrator found Mr. McKenna's assertion that he was not aware in 1989 that he owed taxes implausible. Accordingly, he upheld the charge that Mr. McKenna falsified the 1989 SF 171.
The arbitrator determined that Mr. McKenna's failure to disclose his felony charge on the 1991 and 1992 SF 86's constituted falsification because the New York state law sealing the records did not apply to the federal government. He further determined that Mr. McKenna's falsification of the 1991 SF 86 was intentional, disbelieving Mr. McKenna's claims that he thought that he did not have to disclose the charge because it had been expunged, that he had been told that he did not have to disclose the charge, that he was not aware that the charge was a felony, and that he was confused by the question on the SF 86. The arbitrator also rejected Mr. McKenna's argument that, in providing INS with a Certificate of Disposition for the felony charge, he demonstrated that he did not intend to deceive the agency. The arbitrator concluded that Mr. McKenna only provided the Certificate in response to an INS request, and he noted that the Certificate did not state that the charge at issue was a felony. *fn1 The arbitrator reached a similar Conclusion about the falsification of the 1992 SF 86, noting additionally that he did not believe Mr. McKenna's claim that he was not aware that he actually had been "charged" with a felony. *fn2 Thus, the arbitrator upheld the determination that Mr. McKenna had falsified the 1991 and 1992 SF 86's.
The arbitrator agreed with INS that Mr. McKenna had failed to honor just debts, finding that the evidence established that he owed both child support and federal income taxes at the time of his removal.
With regard to Mr. McKenna's affirmative defense, the arbitrator determined that Mr. McKenna had made out a prima facie case of improper removal under the Whistleblower Protection Act. He found, however, that INS had established by clear and convincing evidence that Mr. McKenna would have been removed in the absence of his whistleblowing activities. Accordingly, he concluded that Mr. McKenna's removal was not barred by the Whistleblower Protection Act.
Finally, the arbitrator reviewed the penalty of removal and found that Mr. McKenna's falsification of three separate documents justified removal.
We review an arbitrator's decision on personnel matters under the same standard as decisions from the Merit Systems Protection Board. Dunn v. Department of Veterans Affairs, 98 F.3d 1308, 1311 (Fed. Cir. 1996). Accordingly, we must affirm the arbitrator's decision unless we find it to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; obtained without procedures required by law, rule, or regulation having been followed; or unsupported by substantial evidence. See 5 U.S.C. § 7703 (1994); Hayes v. Department of the Navy, 727 F.2d 1535, 1537 (Fed. Cir. 1984).
A charge of falsification is established when the agency demonstrates by a preponderance of the evidence that the employee provided incorrect information with an intent to deceive or mislead the agency. See Naekel v. Department of Transp., 782 F.2d 975, 978 (Fed. Cir. 1986). Because direct evidence of intent is rarely available, circumstantial evidence must generally be relied upon to establish intent. See id.
Mr. McKenna admits that he owed taxes in 1989 when he indicated on the SF 171 that he did not, but disputes that he provided incorrect information with an intent to deceive. The arbitrator found that Mr. McKenna was at least reckless with regard to the truthfulness of the response he gave on the SF 171. "Specific intent to make a false or fraudulent statement may be inferred when the alleged misrepresentation is made with reckless disregard for the truth . . . ." Riggin v. Department of Health and Human Serv., 13 M.S.P.R. 50, 53 (1982). In addition, the arbitrator found that Mr. McKenna's explanations for his failure to realize in 1989 that he owed federal income taxes were implausible. Such credibility determinations fall within the arbitrator's discretion, and are "virtually unreviewable on appeal." See Rogers v. Department of Defense Dependents Schools, Germany Region, 814 F.2d 1549, 1554 (Fed. Cir. 1987). Where plausible explanations for an employee's failure to disclose information are absent, intent to deceive may be inferred. See Hanker v. Department of the Treasury, 73 M.S.P.R. 159, 164 (1997). Accordingly, we will not disturb the arbitrator's determination that Mr. McKenna falsified the 1989 SF 171.
Mr. McKenna admits that he was arrested in 1979 for allegedly committing a felony, but asserts that he did not have to reveal this information on the SF 86's because the charge had been dismissed and his record sealed under N.Y.C.P.L. § 160.60. That statute provides in pertinent part as follows:
Upon the termination of a criminal . . . proceeding against a person in favor of such person, . . . the arrest and prosecution shall be deemed a nullity and the accused shall be restored, in contemplation of law, to the status he occupied before the arrest and prosecution. The arrest or prosecution shall not operate as a disqualification of any person . . . to pursue or engage in any . . . occupation . . . . Except where specifically required or permitted by statute or upon specific authorization of a superior court, no such person shall be required to divulge information pertaining to the arrest or prosecution. N.Y.C.P.L. § 160.60 (McKinney 1992) (emphasis added).
The arbitrator found that this state law was "not binding on the Federal sector in relation to determining the fitness of an employee for a Federal government job." Although it is true, as the arbitrator notes, that state laws can be preempted to achieve federal purposes, the arbitrator did not base his Conclusion on any federal law or regulation that might preempt the New York statute at issue. Cf. City of New York v. FCC, 486 U.S. 57, 63 (1988) (noting that the Supremacy Clause applies to both federal statutes and properly adopted federal regulations). The arbitrator's Conclusion appears to be based on the assumption that the statute before us interferes with the federal government's ability to evaluate the fitness of personnel for national security positions. Congress has addressed this issue, however, and has determined that it will defer to state decisions to seal criminal records. 5 U.S.C. § 9101 requires states to provide criminal history records to the federal government when personnel are being investigated for national security purposes. Specifically excluded from the records states must provide are those that have been sealed from access by state and local criminal Justice agencies. See 5 U.S.C. § 9101(a)(2) (1994). Aside from whether Mr. McKenna's position involved national security, this statute prevents us from finding that N.Y.C.P.L. § 160.60 has been preempted by general federal interests in national security.
INS argues that Lacey v. Coughlin, 468 N.Y.S.2d 706 (N.Y. App. Div. 1983), supports the arbitrator's Conclusion. Lacey does not control this case, however. The employer in Lacey, the New York Department of Corrections, learned about a particular employee's arrest before the charges had been dismissed and sealed, and consequently discharged the employee. See id. at 707. The Appellate Division of the New York Supreme Court held that N.Y.C.P.L. § 160.60 did not prevent the Department from inquiring into the facts surrounding the arrest, and permitted the Department to conduct a hearing before determining whether the employee should be reinstated. See id. at 708. Significantly, the court did not suggest that an employee is required to reveal an arrest that already has been dismissed and sealed, which would be contrary to the plain language of the statute.
Under N.Y.C.P.L. § 160.60, Mr. McKenna did not have to reveal the dismissed and sealed felony charge. Accordingly, we find that his failure to disclose this charge on the 1991 and 1992 SF 86's did not constitute falsification of those documents. See Hutton v. OPM, 37 M.S.P.R. 67, 70 (1988) (noting that the appellant did not have to disclose on her employment application a conviction that had been expunged). Thus, we reverse the arbitrator's findings that Mr. McKenna falsified the 1991 and 1992 SF 86's.
The arbitrator also found that Mr. McKenna had failed to honor just debts. Mr. McKenna does not dispute that he owed federal income taxes and child support at the time of his removal, but explains that he was working towards resolving the tax matters and was challenging portions of his child support obligations. These assertions, however, provide no grounds for overturning the arbitrator's findings. We therefore affirm the arbitrator's decision upholding this charge.
The arbitrator determined that Mr. McKenna had established a prima face case of improper discharge under the Whistleblower Protection Act, but decided that INS had overcome this affirmative defense with clear and convincing evidence that Mr. McKenna would have been removed in the absence of his whistleblowing activities. In reaching this Conclusion, the arbitrator properly considered the strength of the evidence which supported the personnel action, the strength of any motive to retaliate, and the agency's treatment of similarly situated employees who were not whistleblowers. See Carr v. Social Sec. Admin., F.3d , 1999 WL 553425 (Fed. Cir. July 30, 1999).
The arbitrator assumed that the INS Inspector who had not been disciplined for failing to reveal an arrest was not a law enforcement officer, and, therefore, could appropriately have been held to a lower standard of behavior than Mr. McKenna. Further, the arbitrator found that INS had a strong case against Mr. McKenna, and that although there was evidence of a motive to retaliate against him, there was no evidence that the agency had treated similarly situated personnel differently. Weighing these factors, he determined that Mr. McKenna's removal was not prohibited by the Whistleblower Protection Act.
In view of our finding that Mr. McKenna did not falsify the 1991 and 1992 SF 86's, we vacate this determination, and remand to the arbitrator for reconsideration of whether, in the absence of the SF 86 falsification charges, there remains clear and convincing evidence that Mr. McKenna would have been removed had he not been a whistleblower. In that context, we note that, contrary to the arbitrator's assumption, an INS Inspector is a law enforcement officer. See Geyer v. Department of Justice, 70 M.S.P.R. 682, 697 (1996) (approving of the administrative Judge's finding that an INS Inspector was a law enforcement officer subject to a higher standard of conduct than non-law enforcement employees); see also N.Y.C.P.L. § 2.15 (McKinney 1992) (listing INS Inspectors, but not INS Detention Enforcement Officers, as "federal law enforcement officers"). Accordingly, on remand, the arbitrator should reconsider his finding that INS did not treat Mr. McKenna differently from other similarly situated employees, since that finding was based on an incorrect assumption concerning the law enforcement status of the INS Inspector whose treatment Mr. McKenna held up for comparison to his own.
As noted above, the arbitrator reviewed the penalty of removal and found that it was reasonable in view of the three falsification charges that he upheld. Because we have reversed two of the three falsification charges, we vacate this determination. On remand, if the arbitrator concludes that Mr. McKenna has not established his affirmative defense under the Whistleblower Protection Act and the penalty issue thus remains relevant, he should consider anew the reasonableness of the penalty imposed upon Mr. McKenna. See Kline v. Department of Transp., 808 F.2d 43, 45-46 (Fed. Cir. 1986).
For the foregoing reasons, the decision of the arbitrator is affirmed-in-part, reversed-in-part, vacated-in-part, and remanded.